SIR ROD EDDINGTON, the departing chief executive of British Airways, signed off his last quarterly results for the airline with a flourish yesterday as profits soared 64 per cent despite record fuel costs.

BA delivered pre-tax profits of £124 million in the first three months of the year and at the same time announced record passenger numbers for last month, saying that the London bombings had had little impact on its business.

The airline raised its earnings forecast for the year as greater demand for flights, rising ticket prices and cost-cutting pushed the operating margin up by 1.7 percentage points.

However, Sir Rod’s target of a 10 per cent margin still looks to be some way off for a company that expects its fuel bill to be £525 million higher in 2005 than it was last year. “I’ve always said to deliver 10 per cent we need to be flying in still air. We continue to make good progress but are still focused on that 10 per cent figure,” he said.

Sir Rod refused to say whether high oil prices were the only obstacle to the margin target. “What about Sars, wars and so on. One thing this business has taught me is that the challenges never end. I think I have said there are four horseman of the apocalypse and I have seen five of them,” Sir Rod, who has spent five years at the helm of the carrier, said.

Martin Broughton, chairman, paid tribute to Sir Rod, saying that the company had become leaner and more robust under his leadership. “His legacy is the culture change he has introduced, in particular, the acceptance of the need to achieve a 10 per cent operating margin,” he said.

In 1997, BA was the most profitable airline in the world but Sir Rod was brought in to try to restore the company to that position after it suffered losses and its share price crashed. Shortly after he arrived, the attacks on September 11, 2001 and then the Iraq war and Sars made the task even harder.

Asked whether he had achieved all he had wanted to, Sir Rod said: “I don’t think you ever achieve all you set out to. But the business is in much better shape than it was before, it has a strong balance sheet and its cost base is lower. It’s now able to withstand the external shocks that continue to come its way.”

Traffic last month, measured in revenue passenger kilometres, increased by 4.2 per cent. The load factor — a measure of the number of available seats filled — increased by 1.4 percentage points on 2004 to 81.1 per cent, a record for July.

Revenues rose 8.3 per cent as business and first-class traffic rose by 6.8 per cent. Attracting premium rate passengers is a key aim for BA but the airline lost business-class passengers after last summer when its services were hit by operational problems and flights were cancelled or delayed.

Analysts had hoped that the increase in premium traffic would be higher, but they said that a 6.8 per cent rise confirmed the trend.

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